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3 Research questions and tentative responses ___________________________ 1.Did regional markets totally disintegrate in post WWII Japan? -Yes, almost completely; but the Tokyo-Osaka rice price linkage prevailed. 2. Did the economic system quickly revert to initial conditions? -No; probably more akin to a Markov switch. 3. How long did disintegration last? -Several years; close to a decade. 4. What were the driving forces leading toward regional market reintegration in the 1950s? - Unclear; it might be that price-fixing played an important role.

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6 The collapse of living standards (1) ___________________________ O my daughter, you should marry a peasant Recurrent complaint among urban Japanese poor folks after WWII. He decided to abide to the law, never resorting to black market. He survived on ration tickets, and finally died of starvation. Popular story about judge Yamaguchi who died in October 1947. Prevalence of malnutrition dystrophia (MD) estimated at 15% in 1945 (Aoki 2008) and 5% of total population in 1947 (Omori 1947). Number of deaths due to MD: 7476 in 1947, 3474 in 1948, 2723 in 1949, 4680 in 1950, 2299 in 1951, 1767, in 1952, 1782 in 1953, 1491 in 1954, 1117 in 1955 (Aoki 2008).

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7 The collapse of living standards (2) ___________________________ Table 1. Average body height of mal students in cm (year of measurement; sample size problems in 1940-46)

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10 The extent of market disintegration ___________________________ - Huge regional price gaps: in 1947, factor of 2.1 to 3.3 between the lowest and the highest in the case of rice producers prices ; CV in a range between 0.24 and 0.37 (<0.1 since late Meiji) - Large retail price gaps between Tokyo and Osaka (between 30 and 100%): much higher than in late-Meiji (in a range of + or - 10%). - Erratic movement of the price of staples relative to rice, both in Tokyo and Osaka: coefficients of correlation in Tokyo in a range between 0.59 (wheat flour/sweet pot.) and 0.93 (rice/barley); in Osaka, 0.29 (barley/sweet pot.) to 0.84 (wheat flour/barley)